Comments on: BusinessWeek’s subscription liabilities http://blogs.reuters.com/felix-salmon/2009/08/19/businessweeks-subscription-liabilities/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: jack http://blogs.reuters.com/felix-salmon/2009/08/19/businessweeks-subscription-liabilities/comment-page-1/#comment-5716 Wed, 19 Aug 2009 22:56:35 +0000 http://blogs.reuters.com/felix-salmon/2009/08/19/businessweeks-subscription-liabilities/#comment-5716 A key point that you are overlooking is that the subscriber liability is not a real liability to these private equity companies who will form LLC’s and protect themselves completely from any future claims. If an unscrupulous PE firm wants to take the working capital and significant amount of the cash flow for themselves and run the business into bankruptcy, the sub liability is a non-issue because individual subscribers have no ability(and probably no desire) to recoup their prepaid subscription unless there is some type of class-action suit and attorney general involvement. Again, unlikely because the individual dollars are so low compared to other class action litigation. Plus, once it is in bankruptcy there are other creditors who will be demanding restitution such as the employees, printers, paper suppliers and other vendors who may have been harmed along with the subscribers.
A strategic partner or public company does have an obligation to fulfill the subscriber liability which is why they are better potential partners for the business being run properly and existing for the long term…perhaps short term as well! It would be very sad indeed to see such a wonderful iconic brand like Business Week fall into the hands of a bottom-feeder PE firm that really has no plans to invest in and preserve/build the brand. One would hope that the current Mcgraw Hill owners require that specific covenants are put in place to prevent new owners from just taking out cash and that certified proof of appropriate resources(ie–a cash fund) exist for the purpose of running/investing in the business.
Lastly, If Business Week is truly losing $40-$50million per year, then they have far greater problems and issues to resolve than worrying about the sub liability.

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By: Shnaps http://blogs.reuters.com/felix-salmon/2009/08/19/businessweeks-subscription-liabilities/comment-page-1/#comment-5701 Wed, 19 Aug 2009 19:15:55 +0000 http://blogs.reuters.com/felix-salmon/2009/08/19/businessweeks-subscription-liabilities/#comment-5701 That reminds me, I just recieved a check from Conde Nast for $4 bucks after I refused their offer to accept issues of Details(!) in lieu of my remaining issues of Portfolio.

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